In planning your inventory management, the first thing you have decided to do is calculate the economic order quantity
Urgent (answers to the questions where answer is written in bold)
You have recently been promoted to
Selling price and cost
The selling price per component is R175. The cost of manufacturing the electronic component is R120.
Other costs related to the inventory
The holding cost of one unit per annum is R17 while the fixed cost of ordering inventory is R250.
Expected sales
Based on the
|
Probability |
Sales units |
|
25% |
125 000 |
|
50% |
150 000 |
|
25% |
175 000 |
In planning your inventory management, the first thing you have decided to do is calculate the economic order quantity. You have determined this to be Answer units (rounded to the nearest unit).
Given the history of stock-outs in the company, you have decided that it is important to hold safety inventory. You have determined the potential safety inventory holding levels to be 0 units or 25 000 units. You have determined the total cost of inventory at each of these levels to be (rounded to the nearest cent):
0 units: RAnswer
25 000 units: RAnswer
Therefore, you have concluded that holding Answer units is optimal for the company.
Step by step
Solved in 2 steps
